California's green-leccy price system will stifle plug-in cars

Only $200/barrel oil can make Chevy Volt worth having

California is generally thought to be perhaps the best place in the world for eco-friendly cars. The populous, wealthy, heavily motorised state has traditionally encouraged the development of low-pollution, energy-saving cars, and such vehicles are more commonly found there than anywhere else.

Unfortunately, according to an American professor who has investigated the matter in detail, California's green, tiered electricity pricing system - meant to encourage consumers into energy-saving practices - will severely penalise residents who choose eco-righteous electric or hybrid vehicles which draw some or all of their energy from the electrical grid rather than an onboard fuel tank.

Californians pay for their 'leccy under a three-level system under which the price goes up the more juice is used.

"The objective of a tiered pricing system is to discourage consumption. It's meant to get you to think about turning off your lights and conserving electricity," says Professor Wally Tyner of Purdue uni. "In California, the unintended consequence is that plug-in hybrid cars won't be economical under this system."

Plug-in hybrid cars are one of the great white hopes of electrical motoring. Like normal hybrid cars (for instance the current Toyota Prius), they possess both an engine with fuel tank and a battery. Unlike today's Prius, however, a plug-in hybrid can be plugged in to the grid to charge up its battery while stationary: a fully charged battery will suffice to make a short journey - for instance a typical American daily commute - without any need to fire up the engine.

If the car's owner needs to make a long trip, there's no need to suffer the "range anxiety" which bedevils battery-only drivers, no call to spend many hours en route recharging: once the battery is exhausted, the engine fires up and the car keeps on running.

Thus, the thinking goes, a plug-in hybrid will permit users to shift much of their transportation energy requirements to grid electricity rather than carbon-belching motor fuel. At the moment, that isn't a particularly green thing to do as grid electricity is mostly made by burning fossil fuel: but it is at least possible to generate electricity greenly, and in future grid 'leccy might come mostly from low-carbon sources such as wind, solar, nuclear etc.

Meanwhile there are energy-security benefits, as power stations can run on fuels such as coal or natural gas which don't (for Americans anyway) need to be imported from possibly inimical or insecure foreign countries.

But nobody is very likely to buy plug-in hybrids or all-battery cars if it costs them hugely more money than having an ordinary fuel-sipper Prius style hybrid or a regular fossil-burner car. And, according to Tyner, that's exactly what will result from California's tiered electrical price system.

"Almost everyone in California reaches the third pricing tier each month," says the prof. "If they add a plug-in hybrid, they are charged the highest rate."

Tyner and his colleagues examined scenarios in which US citizens might buy a plug-in hybrid such as the Chevrolet Volt, a normal runs-on-fuel hybrid like the Prius, or a normal fossil-burner (in this case the Chevy Cobalt). They also looked at different pricing systems: the Californian tiered one, in which electricity is very expensive on average, the flat-price system seen in Indiana, which delivers much cheaper 'leccy, and models in which grid power is cheaper at night. The assembled profs factored in the $7,500 US subsidy on plug-in cars, and then examined the impact of oil prices.

According to Tyner's calculations, the only way that the Volt could cost less than a Prius or Cobalt overall under tiered pricing would be if the price of oil rose to no less than $254 per barrel (it is just over $90/barrel at the time of writing). Even under 'leccy-price plans friendlier to heavy users such as Volt drivers, the price of oil would still need to climb enormously to $171/barrel before it became economically sensible to buy a Volt.

"People who view the Volt as green will pay $10,000 more over the lifetime of the car," says Tyner. "Most consumers will look at the numbers and won't pay that."

Tyner and his colleagues' research is published here in the journal Energy Policy. ®